Financial stability is the foundation for so much of life. When your income and outgoings are roughly equal, and you know exactly what your money situation is, you have choices: where to focus your energy; what your next career move is; what your priorities are based on your values. And yet most of us aren’t ever taught how to achieve financial stability.
So let’s go back to basics, and explore exactly what it looks like – and how you can get there.
How to achieve financial stability
If you’re feeling unstable financially it can be tempting to throw all sorts of tactics at the problem. We rush to trim our budgets, fret about how to earn “more” with only the vaguest idea of what our goals need to be, or find ourselves overwhelmed with complicated investment and asset management plans – when in reality, we’d find ourselves derailed by an unexpected gas bill.
Distracting yourself with that stuff keeps you from the real challenge: getting a clear, unbiased picture of where you are right now, and taking responsibility for changing it.
So if the mere thought of looking at your bank statement sends you into a cold sweat, or you’ve ever found yourself saying “I’m just hopeless with money”, I invite you to stop, and take a deep breath.
Getting to grips with this doesn’t have to be a struggle. It can actually be an easy, gentle process and today I’m going to walk you through exactly what it looks like.
The first thing you need to know is this simple principle:
The key to financial stability is ACCOUNTABILITY
That’s it. That’s what you need to embrace. And if that seems too simple, or too easy (Where’s the 25-step plan? The percentages and spreadsheets?), then let’s walk through exactly what’s involved.
Step one: Take responsibility
Becoming fully responsible in this context means acknowledging that you are the one who’s responsible for your thoughts, actions, and behaviours.
If your outgoings are more than you have coming in, it’s your responsibility to make the shifts you need to.
If you don’t know your financial situation, or it fluctuates so wildly you can’t keep track of it, you’re the one who needs to take action to address that.
It’s a principle that the richest women I know follow. But it’s also a mindset you can adopt today – no matter what your circumstances.
Taking responsibility means being fully committed to “owning” what’s happening in your life, instead of placing the cause outside of your control.
A simple way to track this is to begin to notice any time you find yourself doing any of the following:
- Placing blame on others (If my boss wasn’t so stingy about pay rises… if my partner didn’t have such expensive hobbies…)
- Justifying your circumstances (It’s the economy… it’s my lack of qualifications… it’s the competition)
- Shaming yourself (I’m just no good with figures… As soon as I get money I spend it… I’m never going to be rich)
This week, become aware of any time you find yourself blaming, shaming or justifying your current financial situation. That might be in conversation with others, or just as part of your internal dialogue.
How can you reframe those thoughts, so that you can begin to be someone who takes responsibility for how things are?
2. Be accountable to others
When we look at financially successful women, we generally find they’re not only committed to taking personal responsibility. They have someone in their life who they report to when it comes to their finances. It might be a coach, business partner or accountant.
For you, it might be a close friend, your partner, sister or perhaps another woman in our community.
When we lead women through the 10 Week Wealth Turnaround, our comprehensive financial training for busy women, we invite them to be accountable within our online forum and to “buddy up” with someone else on the program. We know that this makes a huge difference in how effective the techniques and tools we teach are.
Showing up and being answerable for the promises you’re making can make the difference between setting good intentions (that quickly fall by the wayside) and starting to truly get honest about what’s going on.
Who could you be accountable to? Your partner, or someone else?
Reach out to them and ask them if they’d be willing to check in with you once a week on how things are going.
3. Get clear on your numbers
The final step when it comes to reaching financial stability is being accountable in the more familiar way we think of when it comes to money.
For most successful, capable women, the biggest challenge isn’t actually earning or budgeting. Those are important pieces, but they’ll come later.
First you need to know where you are: what’s coming in, what’s going out, and what needs to change in order for things to be different.
You’ll need to know:
- Your expenses – How much is going out each month. This will include your obvious monthly expenditure like housing, bills and groceries as well as less frequent expenses, from annual holidays to sporadic plumbing bills or house maintenance.
- Your income – Not just your salary, but other income like benefits, dividends, interest payments and income from things like rental properties.
- Your liabilities – A fancy word for any debts you have. This might be so called “good” debt, like your mortgage, or that high interest credit card you’re trying to forget. Having it all in one place means you can begin to get to grips with what’s going on.
This is an absolutely vital step, so don’t rush or skip it. I know it might sound counter-intuitive. When you’re slowly turning crimson as your card’s declined by the supermarket cashier, or guiltily trying to hide the evidence of that late-night online shopping spree when the credit card statement arrives, it can certainly feel like getting to financial stability just means finding more money – fast.
But without a clear picture of exactly where your money’s going, you won’t be able to make the empowered, intelligent decisions you need to.
A note on fear
For many of us, this third step is the hardest.
Why?
Often, especially if we’re capable and successful in other areas of our lives, we find ourselves paralysed by fear when it comes to looking at data which relates to our personal finances. This can be true even if handling budgets is something you breeze through as part of your business or job.
If you’re feeling uncomfortable at the thought of gathering your financials in one place, take a moment now and gently ask yourself why.
You might be afraid of what you’re going to find, when it’s all laid out in black and white. You might be worried that you can’t work out a spreadsheet, or that the maths is too complicated, or even that you’re going to be far more successful than you think. (Remember, our fears aren’t always rational!)
If that fear is enough to stop you moving forward, here’s my simple suggestion: Find someone who can do this with you. There will be someone out there who can help you. A friend, neighbour, brother, mum, or your partner. If your fear is going to cloud your ability to do this, reach out and ask someone else to help you through it.
And keep it simple! You don’t have to use a spreadsheet or fancy app. A simple sheet of paper and a pen is all the technology you need to get the clarity that will make the difference.
From awareness to action
When you’ve got clarity on where you are, you’re able to take action based on reality.
You might be pleasantly surprised, and find that you’re actually far more flush than you think. Your income is greater than your outgoings, and you’re ready to look at the next stage of wealth.
You might realize that things need to change if you’re going to “break-even” at the end of the month. Now you know by how much, and you can probably see whether your expenses have room to be trimmed or it’s time to think about raising your earnings.
Perhaps you’re almost there. Your incomings and outgoings are roughly the same. Getting this powerful habit of accountability in place will be the final piece when it comes to reaching stability. After a few tweaks, you’ll be ready to think about your next area of focus.
Need a helping hand with your money?
At One of many, we use a model called the 4 Stages of Wealth to map financial priorities. Financial stability is just the first stage – and we help busy, capable women navigate every step of the journey.
Whether you’re wondering how to set up a budget that works to starting to think bigger about your legacy once you’ve reached financial freedom, we’d love to have a chat about supporting you to take action.
Click here to book a call with the office and find out more.
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